Cameco (CCJ -2.75%) stock has performed exceptionally well over the past few years. Since 2020, shares of the uranium producer are up by more than 1,000%.
What has fueled Cameco's stock price surge? The main factor has been the rising demand for uranium. In 2022, uranium traded at roughly $30 per pound. Today, prices are approaching $100 per pound.
There have been price surges in the past. In 2007, prices also surged above $100 per pound, only to fall back under $30 per pound by 2018.
This surge, however, might be different. That's because nuclear agencies are calling for structurally higher demand for nuclear power to help fuel the global AI data center build-out. According to recent estimates, we could be seeing higher uranium prices for decades to come.
NYSE: CCJ
Key Data Points
Here's why uranium demand is expected to rise 140% by 2050
The Nuclear Energy Agency and the International Atomic Energy Agency regularly publish what is called the "red book." This publication forecasts future nuclear energy supply based on industry project pipelines and growth expectations. The latest report calls for world nuclear capacity to jump from 394 GWe in 2023 to 574 GWe in the low-demand case and 900 GWe in the high-demand case.
Image source: Getty Images.
This forecast is a significant change from the 2022 version of the red book, which called for a much more modest increase in nuclear capacity. The sizable increase in expectations can largely be attributed to AI's rapidly rising demand for a clear, reliable baseload power supply.
More nuclear energy generation capacity means greater demand for nuclear energy. And both agencies believe current uranium supplies won't be enough to support the build-out. This means two things: Either uranium prices are set to rise aggressively, or miners will need to expand production. Both should be good outcomes for uranium producers like Cameco.
